Stocks opened higher following upbeat reports on initial jobless claims and personal income and spending. But the market pared gains after an index of U.S. manufacturing activity came in weaker than expected.

The ISM manufacturing index was "quite disappointing," said Peter Cardillo, market strategist at Rockwell Global Capital. But the index still signaled expansion in the sector, and other economic indicators Thursday were "consistent with better economic growth," he added.

Euro-area officials tentatively approved a second €130 billion bailout for Greece last week, and the European Central Bank announced Wednesday that it loaned €529.5 billion to European banks through a second long-term refinancing operation.

The close watch on the global oil market and rising gas prices continued Thursday, as gas prices climbed for the 23rd straight day to just below $3.74 a gallon.

Economy: The ISM manufacturing index fell 1.7 points to 52.4 in February. The index, based on a survey of purchasing managers, was expected to have risen to 54.7. Any reading above 50 signals expansion.

Separately, construction spending fell 1% in January, according to the U.S. Census Bureau.

Analysts and industry executives said it looks like the annual pace of U.S. sales should come in at or near 15 million vehicles when adjusted for seasonal factors. That would be a big jump from the 14.1 million annual sales rate in January and the best pace of sales since March 2008.

Investors are also digesting indications that China's economy is improving. China's official purchasing managers' index rose to 51 in February from 50.5 the prior month, suggesting that the manufacturing sector is expanding -- albeit slowly.

A separate PMI report from banking company HSBC also showed manufacturing activity edged up last month. But the index reading of 49.6 was just below the 50 threshold for expansion in the sector.